Timing is every thing in currency trading. Forex is a 24 hour market. You will see round the clock action from Monday to Friday in the forex market. This makes it very difficult for new traders to keep track of every single move that takes place in the market.
As a forex trader, you should have a rough idea of the market activity that takes place round the clock so that you have an efficient and time effective method of trading. A currency pair's liquidity and trading range is highly dependent on the market time. Knowing at what times of the day, a certain currency pair will have the widest and the narrowest trading range is going to help you in improving your trading profits.
We can break the 24 hour market activity in forex into different trading sessions based on the different geographical locations in the world. Let's discuss the different trading sessions and know what currency pairs are the best to trade during those trading sessions:
ASIAN TRADING SESSION (7 PM to 4 AM EST)
Tokyo, Hong Kong and Singapore are the most active currency trading centers during this part of the day. For risk tolerant traders, USD/JPY, GBP/CHF and GBP/JPY are the best to trade with wide ranges. Profit potential can be as high as 90 pips. Big financial institutions are busy during this part of the day to change USD into JPY in order to enter the Japanese Equity and Bond Market.
For risk averse traders, AUD/JPY, GBP/USD and USD/CHF are good to trade during this part of the day as they show less volatility and narrow ranges during this time of the day.
US TRADING SESSION (8 AM to 5 PM EST)
New York is one of the largest currency trading center in the world. Heavy trading takes place during this time of the day. For risk tolerant traders, GBP/USD, USD/CHF, GBP/JPY and GBP/CHF are the best to trade with range as wide as 120 pips during this time of the day. GBP/JPY and GBP/CHF have the widest trading range during this part of the day.
EUROPEAN TRADING SESSION (2 AM to 12 PM EST)
This trading session is also known as th London Trading Session. The market share of London in forex is around 30%. So you can well imagine the amount of currency transactions that take place during this time of the day. GBP/JPY and GBP/CHF are the best to trade during this time of the day. The daily range during this time of the day can be as high as 140 pips with a lot of profit making potential.
Knowning what are the best time to trade the different currency pairs is going to make your forex trading more efficient and effective. You should know what is the best time to make the most profit from the different currency pairs!